Payday Loans

You may have seen companies around your city or town — or seen websites — that offer "payday loans". Payday loans are small loans that a borrower usually is required to pay back on or before his or her next payday (whether that payday is from a job or from some other income source, like a pension). Payday lenders often limit the loan to about 30 or 40% of the expected net amount (i.e., the amount after taxes and other deductions) of the borrower's next paycheque. Usually, the borrower writes a cheque to the lender for the amount that was borrowed, plus all of the interest and fees. The cheque is usually post-dated to the next payday, and is usually cashed at that time.

Before you consider applying for a payday loan, remember this: payday loans are the most expensive way to borrow money, so consider all of your options. To learn more about payday loans, please visit the website of the Financial Consumer Agency of Canada, where you will find an informative brochure entitled The Cost of Payday Loans. (courtesy of Industry Canada)